EXHIBIT 10.2
Execution Copy
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CHURCHILL DOWNS INCORPORATED
FIRST AMENDMENT AGREEMENT
Dated as of October 14, 2004
to
NOTE PURCHASE AGREEMENTS
Dated as of April 3, 2003
Re: $100,000,000 Floating Rate Senior Secured Notes Due March 31, 2010
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Table of Contents
SECTION HEADING PAGE
SECTION 1. OMNIBUS AMENDMENT....................................... .......1
SECTION 2. ADDITIONAL AMENDMENTS TO EXISTING NOTE PURCHASE
AGREEMENTS......................................................2
SECTION 3. CONDITIONS PRECEDENT............................................7
SECTION 4. REPRESENTATIONS AND WARRANTIES..................................11
SECTION 5. REAFFIRMATIONS AND CONSENTS.....................................13
SECTION 6. CERTAIN LICENSES................................................13
SECTION 7. BREACH OF THIS FIRST AMENDMENT AGREEMENT........................14
SECTION 8. MISCELLANEOUS...................................................14
Signatures....................................................................15
SCHEDULE A - Holders
SCHEDULE I
EXHIBIT A - Form of legal opinion of Rebecca C. Reed, Esq.
EXHIBIT B - Form of legal opinion of Wyatt, Tarrant & Combs, LLP
EXHIBIT C - Form of legal opinion of Lemle & Kelleher
EXHIBIT D - Form of legal opinion related to licenses
SCHEDULE 3(a) - Louisiana Properties
SCHEDULE 3(i) - Searches
SCHEDULE 3(k) - Consents
SCHEDULE 3(s) - Real Property
SCHEDULE 3(t) - Surveyors
SCHEDULE 3(w) - Real Property Collateral
FIRST AMENDMENT AGREEMENT
TO
Re: NOTE PURCHASE AGREEMENTS DATED AS OF APRIL 3, 2003
Dated as of
October 14, 2004
To each of the holders
listed in Schedule A to
this First Amendment Agreement
Ladies and Gentlemen:
Reference is made to (i) the separate Note Purchase Agreements each dated
as of April 3, 2003 (the "EXISTING NOTE PURCHASE AGREEMENTS" and, as amended
hereby, the "NOTE PURCHASE AGREEMENTS"), among Churchill Downs Incorporated, a
Kentucky corporation (the "COMPANY") and the purchasers named on Schedule A
attached thereto, respectively and (ii) the $100,000,000 aggregate principal
amount of Floating Rate Senior Secured Notes, due March 31, 2010 of the Company
(the "NOTES").
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company requests the amendment of certain
provisions of the Existing Note Purchase Agreements as hereinafter provided.
Upon your acceptance hereof in the manner hereinafter provided and upon
satisfaction of all conditions to the effectiveness hereof and receipt by the
Company of similar acceptances from the holders of the Notes, this First
Amendment Agreement shall constitute a contract between us amending the Existing
Note Purchase Agreements and Notes, in each case, as of October 14, 2004, but
only in the respects hereinafter set forth:
SECTION 1. OMNIBUS AMENDMENT.
In the event that as of the last day of any fiscal quarter of the Company,
the Leverage Ratio for the then most-recently ended four fiscal quarters is
equal to or greater than 4.00 to 1.00, the Adjusted LIBOR Rate applicable to the
immediately succeeding 3 month period shall be defined as LIBOR plus 280 basis
points. In the event that the Leverage Ratio for the then most-recently ended
four fiscal quarters is equal to or greater than 3.50 to 1.00, but less than
4.00 to 1.00, the Adjusted LIBOR Rate applicable to the immediately succeeding 3
month period shall be defined as LIBOR plus 230 basis points. In the event that
the Leverage Ratio for the then most-recently ended four fiscal quarters is less
than 3.50 to 1.00, the Adjusted LIBOR Rate applicable to the immediately
succeeding 3 month period shall be defined as LIBOR plus 155 basis points. The
Obligors and each of the holders acknowledge that the Note Purchase Agreements
and the Notes shall be and are hereby amended to incorporate the provisions of
this
Churchill Downs Incorporated First Amendment Agreement
Section 1. Notwithstanding anything contained herein to the contrary, the
Adjusted LIBOR Rate applicable to the Notes for the 3 month period beginning
January 1, 2005 shall be LIBOR plus 280 basis points. For each subsequent 3
month period beginning April 1, 2005, the Leverage Ratio shall be determined
pursuant to financial statements and certificates by a Senior Financial Officer
delivered to the holders in accordance with Sections 7.1 and 7.2 of the Note
Purchase Agreements. If the Company fails to deliver such financial statements
and/or certificates as required pursuant to such Sections 7.1 and 7.2, the
Adjusted LIBOR Rate shall be defined as LIBOR plus 280 basis points until five
days after such financial statements and certificates are so delivered.
SECTION 2. ADDITIONAL AMENDMENTS TO EXISTING NOTE PURCHASE AGREEMENTS.
SECTION 2.1 Section 10.5(a) of the Existing Note Purchase Agreements
shall be and is hereby amended in its entirety to read as follows:
"The Company will not permit the Leverage Ratio, determined as of the
end of each of its fiscal quarters, of (i) Consolidated Funded
Indebtedness, as adjusted by the Seasonal Borrowing Needs Adjustment
in appropriate fiscal quarters, to (ii) Consolidated Adjusted EBITDA
for the then most-recently ended four fiscal quarters to be greater
than:
LEVERAGE RATIO PERIOD
5.00 to 1.00 October 14, 2004 through June 29, 2005
4.25 to 1.00 June 30, 2005 through June 29, 2006
3.75 to 1.00 June 30, 2006 through June 29, 2007
3.50 to 1.00 June 30, 2007 and thereafter"
SECTION 2.2. Section 11(f) of the Existing Note Purchase Agreements
shall be and is hereby amended in its entirety to read as follows:
" (f) (i) the Company or any Subsidiary is in default (as principal or as
guarantor or other surety) in the payment of any principal of or premium
or make-whole amount (including any LIBOR Breakage Amount) or interest on
any Indebtedness that is outstanding in an aggregate principal amount of
at least $15,000,000 beyond any period of grace provided with respect
thereto, or (ii) the Company or any Subsidiary is in default in the
performance of or compliance with any term of any evidence of any
Indebtedness in an aggregate outstanding principal amount of at least
$15,000,000 or of any mortgage, indenture or other agreement relating
thereto or any other condition exists, and as a consequence of such
default or condition such Indebtedness has become, or has been declared
(or one or more persons are entitled to declare such Indebtedness to be),
due and payable before its stated maturity or before its regularly
scheduled dates of payment, or (iii) as a consequence of the occurrence or
continuation of any event or condition (other than the passage of time or
the right of the holder of Indebtedness to convert such Indebtedness into
equity interests), (x) the Company or any Subsidiary has become
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Churchill Downs Incorporated First Amendment Agreement
obligated to purchase or repay Indebtedness before its regular maturity or
before its regularly scheduled dates of payment in an aggregate
outstanding principal amount of at least $15,000,000, or (y) one or more
Persons have the right to require the Company or any Subsidiary so to
purchase or repay such Indebtedness; or"
SECTION 2.3. Schedule B to the Existing Note Purchase Agreements shall be
and is hereby amended by adding or replacing the following definitions thereto
in alphabetical order:
"ADJUSTED EBITDA" of any person for any period means the EBITDA for that
Person for that period adjusted on a pro forma basis for the EBITDA of acquired
or divested operations, provided that any EBITDA of CDLHC, CDLVP and VSI
(whether positive or negative) for any period prior to October 14, 2004 will not
be included in the Adjusted EBITDA of those entities.
"CDLHC" means Churchill Downs Louisiana Horseracing Company, L.L.C., a
Louisiana limited liability company
"CDLVP" means Churchill Downs Louisiana Video Poker Company, L.L.C., a
Louisiana limited liability company.
"COLLATERAL DOCUMENTS" means, collectively, all of the instruments,
documents and agreements pursuant to which any Person grants a Lien on or
security interest in all or any portion of the Collateral, including, without
limitation, those documents referred to in Section 6.25 of the Bank Credit
Agreement, including, without limitation, all pledge and security agreements,
mortgages, assignments of patents, trademarks and copyrights, the Negative
Pledge Agreement, the Intercompany Subordination Agreement, the Collateral
Sharing Agreement, the 2004B Collateral Documents, and all other documents and
instruments executed as security for any obligations of any Obligor under any
Financing Agreement and any other agreements, documents or instruments
guaranteeing or securing any obligations of any Obligor under any Financing
Agreement.
"CONSOLIDATED ADJUSTED EBITDA" for any period means the consolidated
Adjusted EBITDA of all of the Obligors for that period, consolidated in
accordance with GAAP. The EBITDA of the Excluded Subsidiaries shall not be
included in Consolidated Adjusted EBITDA.
"CONSOLIDATED FUNDED INDEBTEDNESS" means at any time the aggregate dollar
amount of Consolidated Indebtedness which has actually been funded and is
outstanding at such time, whether or not such amount is due or payable at such
time.
"CONSOLIDATED INDEBTEDNESS" means at any time the Indebtedness of the
Obligors calculated on a consolidated basis as of such time in accordance with
GAAP.
"EBITDA" for any Person for any period of determination means that
Person's net income plus, to the extent deducted from revenues in determining
net income, (i) interest expense, (ii) expense for taxes paid or accrued, (iii)
depreciation, (iv) amortization, (v) extraordinary losses incurred other than in
the ordinary course of business, and (vi) in the
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Churchill Downs Incorporated First Amendment Agreement
case of Ellis Park Race Course, Inc., (a) the impairment charge deducted from
the net income of Ellis Park Race Course, Inc. with respect to the fourth fiscal
quarter in 2002, and (b) the lesser of (1) the one-time non-cash impairment
charge, if any, deducted from the net income of Ellis Park Race Course, Inc.
with respect to either the third fiscal quarter in 2004 or the fourth fiscal
quarter in 2004 (but not both quarters), or (2) $6,200,000; minus, to the extent
included in net income, that Person's extraordinary gains realized other than in
the ordinary course of business, in each case for such period determined, in
accordance with GAAP.
"EXCLUDED ENTITIES" means any corporation, partnership, limited liability
company or other Person in which the Obligors hold an ownership interest, either
directly or indirectly, and which is not an Obligor.
"EXCLUDED SUBSIDIARIES" means any Excluded Entity which is a Subsidiary of
the Company. The Excluded Subsidiaries on the date of the closing of the First
Amendment Agreement are Hoosier Park, L.P., Churchill Downs Simulcast
Productions, LLC (formerly known as Charlson Broadcast Technologies LLC),
Churchill Downs Pennsylvania Company (formerly known as Churchill Downs
California Foodservices Company), Tracknet, LLC, and Anderson Park, Inc. Fair
Grounds International Venture L.L.C., a Louisiana limited liability Company, F.
G. Staffing Services, Inc., a Louisiana corporation and Charlson Industries,
Inc., an Ohio corporation shall become Excluded Subsidiaries on the date the
Fair Grounds Acquisition is effected.
"FAIR GROUNDS" means Fair Grounds Corporation, a Louisiana corporation.
"FAIR GROUNDS ACQUISITION" means the acquisition of the assets of Fair
Grounds and Finish Line and the stock of VSI.
"FAIR GROUNDS ACQUISITION DOCUMENTS" shall mean all of the documents
through which the Fair Grounds Acquisition is consummated, including, without
limitation, (a) the Third Amended Plan of Reorganization, filed in the United
States Bankruptcy Court for the Eastern District of Louisiana, Bankruptcy Case
No 03-16222, by Fair Grounds, as Debtor and Debtor-in-possession; (b) the Order,
dated September 28, 2004, entered by the United States Bankruptcy Court for the
Eastern District of Louisiana in Bankruptcy Case No 03-16222, confirming the
Third Amended Plan of Reorganization of Fair Grounds; (c) the Asset Purchase
Agreement, dated as of August 31, 2004, as amended by the First Amendment, dated
as September 17, 2004, among the Company, on behalf of one of its wholly owned
subsidiary to be formed, Fair Grounds and the Company; (d) the Asset Purchase
Agreement, dated as of October 14, 2004, between CDLHC and Finish Line; and (e)
the Stock Purchase Agreement, dated October 14, 2004, between CDLVP , Steven
Rittvo, Ralph Capitelli, T. Cary Wicker III and Louisiana Ventures, Inc.
"FAIR GROUNDS ASSIGNMENT AND SUBORDINATION OF LEASE AND MANAGEMENT
AGREEMENT" means the Assignment and Subordination of Lease and Management
Agreement, dated as of October 14, 2004, between CDLHC, as Landlord, and Fair
Grounds, as Tenant.
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Churchill Downs Incorporated First Amendment Agreement
"FINANCING STATEMENT" shall mean financing statements of the Company or a
Guarantor, naming the Company or such Guarantor as debtor and the Collateral
Agent as secured party as amended from time to time.
"FINISH LINE" means Finish Line Management Corp., a Louisiana corporation.
"FIRST AMENDMENT AGREEMENT" means the First Amendment Agreement dated as
of October 14, 2004 to Note Purchase Agreements dated as of April 3, 2003 by and
among the Company, the Guarantors and the holders.
"JAZZ FEST SUBORDINATION AGREEMENT AND ESTOPPEL" means the Subordination,
Non-disturbance and Attornment Agreement dated as of October 14, 2004, between
The New Orleans Jazz and Heritage Foundation, Inc. as Tenant, and the Collateral
Agent as mortgagee under the Mortgage defined therein, together with the
Estoppel Certificate by The New Orleans Jazz and Heritage Foundation, Inc. in
favor of the Collateral Agent.
"KELLEY NOTE" means that certain Convertible Promissory Note dated on or
about October 14, 2004 issued by the Company in favor of Brad M. Kelley, an
individual.
"LEVERAGE RATIO" means, as of any date of calculation, the ratio of (i)
Consolidated Funded Indebtedness outstanding on such date to (ii) Consolidated
Adjusted EBITDA, in each instance computed in accordance with Section 10.5(a)
and GAAP.
"LOUISIANA MORTGAGES" means the Mortgages, Assignments of Rents and
Security Agreements dated as of October 14, 2004 and the Leasehold Mortgages,
Assignments of Rents and Security Agreements dated as of October 14, 2004 and
Deeds of Trust dated as of October 14, 2004 encumbering the Obligors' fee or
leasehold interest in those properties listed on Schedule 3(a) of the First
Amendment Agreement and delivered by each of the applicable Obligors with
respect to each of the parcels of real property listed on Schedule 3(a) to the
Collateral Agent for the benefit of the holders, subject to the terms of the
Collateral Sharing Agreement, as they may be amended and/or supplemented from
time to time.
"LOUISIANA TITLE INSURER" means Stewart Title Guaranty.
"REAL PROPERTY" means, collectively, each of the parcels of owned and/or
leased real property of any of the Obligors, all of which is listed on Schedule
3(w).
"REAL PROPERTY COLLATERAl" means each of the parcels of owned Real
Property listed on Schedule 3(w) except as set forth on such Schedule.
"SEASONAL BORROWING NEEDS ADJUSTMENT" means the reduction of the
Consolidated Funded Indebtedness as of the end of (i) the first fiscal quarter
of the Company's fiscal year 2005 by $25,000,000, (ii) the first fiscal quarter
of the Company's fiscal year 2006 by $25,000,000, (iii) the first fiscal quarter
of the Company's fiscal years 2007, 2008, 2009 and 2010 by $25,000,000.
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Churchill Downs Incorporated First Amendment Agreement
"2004B AMENDMENT TO THE PLEDGE AND SECURITY AGREEMENT" means the 2004B
Amendment to Pledge and Security Agreement, dated as of October 14, 2004, among
the applicable Obligors and the Collateral Agent for the benefit of the holders,
subject to the provisions of the Collateral Sharing Agreement, as they may be
amended and/or supplemented from time to time.
"2004B ASSIGNMENTS OF PATENT, TRADEMARKS AND COPYRIGHTS" means the
Assignment of Patent, Trademarks and Copyrights, dated as of October 14, 2004,
executed by CDIP, LLC in favor of the Collateral Agent and the Assignment of
Patent, Trademarks and Copyrights, dated as of October 14, 2004, executed by
CDLHC, in favor of the Collateral Agent.
"2004B BANK AMENDMENT" means the 2004B Amendment to Loan Documents, dated
as of October 14, 2004, among Bank One, NA, headquartered in Chicago, Illinois
(successor by merger to Bank One, Kentucky, NA) a national banking association
with an office in Louisville, Kentucky, as contractual representative for the
Banks as provided in the Bank Credit Agreement as agent, the Guarantors and the
Company.
"2004B COLLATERAL DOCUMENTS" means, collectively, all of the instruments,
documents and agreements pursuant to which any Person grants a Lien on or a
security interest in all or any portion of any Collateral pursuant to the First
Amendment Agreement and/or 2004B Bank Amendment, including without limitation,
those documents referenced in Sections 6.25 and 6.29 of the Bank Credit
Agreement, including without limitation, the 2004B Amendment to the Pledge and
Security Agreement, the 2004B Louisiana Addendum to Pledge and Security
Agreement (as defined in the 2004B Amendment to Pledge and Security Agreement),
the 2004B Consent Joinder and Reaffirmation, the Louisiana Mortgages, the 2004B
Assignments of Patents, Trademarks and Copyrights, the Fair Grounds Assignment
and Subordination of Lease and Management Agreement, the Jazz Fest Subordination
Agreement and Estoppel and all other documents or instruments executed as
security for the obligations of any Obligor in connection with the First
Amendment Agreement and/or 2004B Bank Amendment from time to time, as they may
be amended and/or supplemented from time to time.
"2004B CONSENT JOINDER AND REAFFIRMATION" shall mean the 2004B Consent
Joinder and Reaffirmation, dated October 14, 2004, among the Collateral Agent,
the Company and the Guarantors.
"2004B GUARANTOR JOINDER" shall mean the Guarantor Joinder, dated October
14, 2004, among the Collateral Agent, the Company and the Guarantors.
"VSI" means Video Services, Inc., a Louisiana corporation.
SECTION 2.4. Schedule B of the Existing Note Purchase Agreements shall be
and is hereby amended by deleting the following definitions: "Consolidated
Funded Debt," "Consolidated Operating Cash Flow," and "Monetary Default".
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Churchill Downs Incorporated First Amendment Agreement
SECTION 3. CONDITIONS PRECEDENT.
This First Amendment Agreement shall not become effective until, and shall
become effective on, the Business Day (the "EFFECTIVE DATE") when each of the
following conditions shall have been satisfied:
(a) Each holder shall have received this First Amendment Agreement,
duly authorized and fully executed by the Company and the Guarantors.
(b) The holders shall have consented to this First Amendment Agreement
as evidenced by their execution thereof.
(c) Each and every representation and warranty made by or on behalf of
the Company and/or any Guarantor relating to this First Amendment Agreement
or any of the other Financing Agreements, as modified by this First
Amendment Agreement shall be true, complete and correct in all material
respects on and as of the date of this First Amendment Agreement and as of
the date this First Amendment Agreement is actually executed and delivered.
(d) The Company shall have paid to the holders, on a PRO RATA basis
based on the aggregate outstanding principal amounts of the Notes held by
said holders on the date hereof, a non-refundable fee of $125,000.
(e) The Company and the Guarantors shall have delivered to each holder
duly authorized and fully executed originals of the Subsidiary Guaranty
Supplement dated as of October 14, 2004, satisfactory to the Required
Holders in all respects, among other things, including CDLHC, CDLVP and VSI
as Guarantors.
(f) The Company and the Guarantors shall have delivered all Collateral
Documents and other Financing Agreements, necessary to effectuate this
First Amendment Agreement, executed by the Company and/or the Guarantors,
as the case may be, including, without limitation, all of the 2004B
Collateral Documents.
(g) The Company and the Guarantors shall deliver any and all
Collateral required to be delivered to the Collateral Agent with copies to
each holder, including, but not limited to, any and all stock certificates
of VSI, together with stock powers executed in blank.
(h) Each holder shall have received such Officer's Certificates and
such certificates of a secretarial officer of the Company and each
Guarantor as it may reasonably request with respect to this First Amendment
Agreement and the transactions contemplated hereby.
(i) The Collateral Agent shall have received reports of searches of
personal property records from the appropriate reporting agencies listed on
Schedule 3(i) to this
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Churchill Downs Incorporated First Amendment Agreement
First Amendment Agreement. The Collateral Agent may obtain such reports but
the Company shall pay all costs associated with obtaining them. The reports
of searches of the personal property records shall not disclose any
security interest in the CDLHC, CDLVP, VSI, Finish Line and Fair Grounds'
personal property other than to the Collateral Agent's security interest
therein other than Permitted Liens.
(j) The Company shall have provided evidence satisfactory to the
holders of any regulatory approvals required from any and all government
agencies to consummate the Fair Grounds Acquisition and/or otherwise
required pursuant to the Note Purchase Agreements and/or this First
Amendment Agreement.
(k) The Company shall have provided to the holders all material
third-party consents listed on Schedule 3(k) to this First Amendment
Agreement, and/or otherwise required to consummate the Fair Grounds
Acquisition, and/or otherwise required pursuant to the Note Purchase
Agreements and/or this First Amendment Agreement.
(l) The Company shall have paid the fees and disbursements of the
holders' special counsel, Chapman and Cutler LLP, incurred in connection
with the negotiation, preparation, execution and delivery of this First
Amendment Agreement and the transactions contemplated hereby which fees and
disbursements are reflected in the statement of such special counsel
delivered to the Company at the time of the execution and delivery of this
First Amendment Agreement. Upon receipt of any supplemental statement after
the execution of this First Amendment Agreement, the Company will pay such
additional fees and disbursements of the holders' special counsel which
were not reflected in its accounting records as of the time of the delivery
of the initial statement of fees and disbursements.
(m) Each holder shall have received evidence of insurance naming the
Collateral Agent as additional insured and loss payee with such responsible
and reputable insurance companies or associations, and in such amounts and
covering such risks, as is satisfactory to the holders.
(n) The holders shall have received termination and/or releases
relating to claims, liens and/or other rights regarding or that may
otherwise affect any of the Collateral other than the liens and/or security
interests created in the Collateral Documents and Permitted Liens.
(o) The Company and the Guarantors shall authorize the Collateral
Agent to file such financing statements, amendments to financing
statements, statutory declarations or other documents for filing with
public officials with respect to the property pledged in the 2004B
Collateral Documents (including without limitation, fixture financing
statements) as the Collateral Agent may request.
(p) The holders shall have received the legal opinion of Rebecca C.
Reed, Esq., General Counsel for the Company and the Guarantors, Wyatt,
Tarrant & Combs,
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Churchill Downs Incorporated First Amendment Agreement
LLP as counsel for the Company and the Guarantors, and the legal opinion of
Lemle & Kelleher, special Louisiana counsel to the Company and the
Guarantors, addressed to the holders, dated the date this First Amendment
Agreement is delivered, in scope, form and substance satisfactory to the
holders and their counsel, and addressing the matters in Exhibit A, B and C
to this First Amendment Agreement, respectively, along with any other
matters required by the holders.
(q) The Company shall have provided copies of all of the Fair Grounds
Acquisition Documents certified by either the Senior Financial Officer or
Secretary of the Company to be true, correct and complete, together with
evidence satisfactory to the holders of closing under the Fair Grounds
Acquisition Documents in accordance with their terms and in compliance with
all applicable laws, rules and regulations, including, without limitation,
the Title 11 of the United States Code and the Federal Rules of Bankruptcy
Procedure.
(r) The Company and Guarantors shall have delivered title insurance
policies or an irrevocable commitment to issue policies in the form of
holder approved pro-forma policies, in favor of the Collateral Agent for
the benefit of the holders, in ALTA 1992 Form B Loan Policy form without
creditor's rights exceptions, and in amounts agreed upon and acceptable to
the holders, with premiums paid thereon, delivered by the Obligors, issued
by Louisiana Title Insurer and insuring the Louisiana Mortgages on fee
property as valid first priority Liens upon the applicable Obligors' fee
simple title to, or leasehold interest in, the Real Property Collateral and
all improvements and all appurtenances thereto (including such easements
and appurtenances as may be required by the holders), free and clear of any
and all defects and encumbrances whatsoever, subject only to such
exceptions as may be approved in writing by the holders, with endorsements
thereto as to such matters as the holders may designate, purchased by the
Obligors on the closing date for each of the Louisiana Mortgages on fee
properties.
(s) The Company and the Guarantors shall have delivered Phase I
environmental assessments performed on each parcel of real property listed
on Schedule 3(s) to this First Amendment Agreement, with the results of
such environmental assessments satisfactory to the Collateral Agent in its
discretion. In the event Phase II assessments, contamination assessment
reports or remediation action plans have been prepared for any real
property listed on Schedule 3(s), such plans, assessments and reports,
including recent updates and data submissions, shall be provided to the
Collateral Agent and must be satisfactory to the Collateral Agent in its
discretion. Without limiting the foregoing, such assessments shall be
performed in accordance with ASTM 1527 E standards for environmental
assessments and shall determine whether there are any Recognized
Environmental Conditions (as defined in such standards) on the real
property listed on Schedule 3(s), provide the historical ownership and use
of the real property, describe the current use of the real property listed
on Schedule 3(s), provide any information available in EPA records and
state EPA records on previous investigations and litigation, describe any
adjacent properties which have been or could be potential
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Churchill Downs Incorporated First Amendment Agreement
hazards, and locations of equipment containing PCBs and provide a
conclusion and recommendation statement.
(t) The Company shall deliver a survey of the property listed on
Schedule 3(t) to this Amendment not later than one (1) day prior to the
date of this First Amendment Agreement. Such survey shall be prepared by
surveyor listed on such Schedule 3(t). Such survey shall be reasonably
satisfactory to the holders and shall be certified to the Collateral Agent,
each holder and the Louisiana Title Insurer. The survey shall evidence to
the satisfaction of the holders that all of the real property listed on
Schedule 3(t) included in the applicable Louisiana Mortgage is owned by the
applicable Obligors free and clear of encroachments onto or by other
properties, defects of title, observable violations of restrictions or
encroachments into easements except for Permitted Liens, and be sufficient
to allow the Louisiana Title Insurer to issue loan policies without survey
exceptions.
(u) The holders shall have received signed copies of all of the
documents relating to the 2004B Bank Amendment certified by the Senior
Financial Officer or Secretary of the Company to be true, correct and
complete, together with evidence satisfactory to the holders that all of
the conditions precedent to the 2004B Bank Amendment have been satisfied,
and such 2004B Bank Amendment has become effective.
(v) The Collateral Agent shall have received any required consents
and/or authorization from the holders and the Banks under the Collateral
Sharing Agreement through the 2004B Consent Joinder and Reaffirmation or
otherwise satisfactory to the holders.
(w) Estoppel certificates and subordination, non-disturbance and
attornment agreements from such tenants at the Real Property Collateral
shall be delivered as holders shall require.
(x) The Company shall have provided evidence satisfactory to the
holders that the obligations of the Company under the Kelley Note are
subordinate to the obligations of the Company to the holders under the
Financing Agreements.
(y) All corporate and other proceedings in connection with the
transactions contemplated by this First Amendment Agreement and all
documents and instruments incident to such transactions shall be
satisfactory to you and your special counsel, and you and your special
counsel shall have received all such counterpart originals or certified or
other copies of such documents as you or they may reasonably request.
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Churchill Downs Incorporated First Amendment Agreement
SECTION 4. REPRESENTATIONS AND WARRANTIES.
The Company and the Guarantors hereby represent and warrant that as of the
date hereof and as of the date of execution and delivery of this First Amendment
Agreement:
(a) The Company and each Guarantor is duly formed, validly existing
and in good standing under the laws of its state of incorporation or
formation.
(b) The Company and each Guarantor has the corporate or limited
liability company power to own its property and to carry on its business as
now being conducted.
(c) The Company and each Guarantor is duly qualified and in good
standing as a foreign entity authorized to do business in each jurisdiction
in which the failure to do so would, individually or in the aggregate, have
a material adverse effect on the business, condition (financial or other),
assets, operations, properties or prospects of such Company and each
Guarantor.
(d) This First Amendment Agreement and the transactions contemplated
hereby are within the corporate or limited liability company powers of the
Company and each Guarantor, have been duly authorized by all necessary
corporate or limited liability company action on the part of the Company
and each Guarantor and this First Amendment Agreement has been duly
executed and delivered by the Company and each Guarantor and constitutes
legal, valid and binding obligations of the Company and each Guarantor
enforceable in accordance with its respective terms.
(e) The Company and each Guarantor represents and warrants that there
is no Default or Event of Default under the Note Purchase Agreements
immediately before and immediately after giving effect to this First
Amendment Agreement.
(f) The execution, delivery and performance of this First Amendment
Agreement by the Company and each Guarantor does not and will not result in
a violation of or default under (A) the articles of incorporation, articles
of organization, bylaws or operating agreement (as the case may be) of the
Company and each Guarantor, (B) any material agreement to which the Company
and each Guarantor is a party or by which it is bound or to which the
Company and each Guarantor or any of its properties is subject, (C) any
material order, writ, injunction or decree binding on the Company and each
Guarantor, or (D) any material statute, regulation, rule or other law
applicable to the Company and each Guarantor.
(g) No authorization, consent, approval, exemption or action by or
notice to or filing with any court or administrative or governmental body
(other than periodic filings with regulatory authorities, none of which are
required to be filed as of the effective date of this First Amendment
Agreement) is required in connection with the execution and delivery of
this First Amendment Agreement or the consummation of the transactions
contemplated thereby.
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Churchill Downs Incorporated First Amendment Agreement
(h) The Company and each Guarantor have not paid or agreed to pay any
fees or other consideration, or given any additional security or
collateral, or shortened the maturity or average life of any indebtedness
or permanently reduce any borrowing capacity, in each case, in connection
with the obtaining of any consents or approvals in connection with the
transactions contemplated hereby or under the Bank Credit Agreement
including, without limitation thereof, in connection with the Bank Credit
Agreement other than the payment of legal fees of Frost Brown Todd LLC in
connection with the Bank Credit Agreement and payment of certain fees set
forth in Section 8 of the 2004B Bank Amendment.
(i) From and after the filing of the Louisiana Mortgages and the
Financing Statements, the Collateral Documents will create valid and
perfected Liens in the Collateral covered thereby, enforceable against the
Company or Guarantor, party thereto and all third-parties, except as
permitted by this First Amendment Agreement, securing the payment of all
Indebtedness purported to be secured thereby and all filings and other
actions necessary or desirable to perfect and protect such Liens, as
requested by the Required Holders, will have been duly taken.
(j) The obligations of the Company under the Kelley Note are
subordinate to the obligations of the Company to the holders under the
Financing Agreements.
(k) (i) Churchill Downs Louisiana Horseracing Company L.L.C., a
Louisiana limited liability company (ii) Churchill Downs Louisiana Video
Poker Company, L.L.C., a Louisiana limited liability company (iii) Video
Services, Inc., a Louisiana corporation, (iv) Arlington Management
Services, LLC, an Illinois limited liability company, (v) Arlington OTB
Corp., a Delaware corporation, (vi) Arlington Park Racecourse, LLC, an
Illinois limited liability company, (vii) CDIP, LLC, a Kentucky limited
liability company, (viii) CDIP Holdings, LLC, a Kentucky limited liability
company, (ix) Calder Race Course, Inc., a Florida corporation, (x)
Churchill Downs California Company, a Kentucky corporation, (xi) Churchill
Downs California Fall Operating Company, a Kentucky corporation, (xii)
Churchill Downs Investment Company, a Kentucky corporation, (xiii)
Churchill Downs Management Company, a Kentucky corporation, (xiv) Ellis
Park Race Course, Inc., a Kentucky corporation, (xv) Quad City Downs, Inc.,
an Iowa corporation, (xvi) Racing Corporation of America, a Delaware
corporation and (xvii) Tropical Park, Inc., a Florida corporation are the
only Guarantors (as defined in each of the following respective documents)
under the Note Purchase Agreement and the Bank Credit Agreement and the
Company is the only borrower under the Bank Credit Agreement. No collateral
has been given to secure the Bank Credit Agreement except for Collateral
which has been given to secure the holders under the Note Purchase
Agreements on a PARI PASSU basis.
SECTION 5. REAFFIRMATIONS AND CONSENTS.
The Company and the Guarantors:
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Churchill Downs Incorporated First Amendment Agreement
(a) CONSENT. Consent to the transactions contemplated in this First
Amendment Agreement.
(b) REAFFIRM. Reaffirm their respective obligations under any and all
of the Financing Agreements and any and all other agreements, instruments
and documents to which any of them is a party and under which any holder
has any rights or obligations and which is or may be related in any way to
the agreements, instruments and documents mentioned in or affected by this
First Amendment Agreement, or the Note Purchase Agreements or any of the
other Financing Agreements as amended by this First Amendment Agreement.
(c) AGREE. Agree that all of the Financing Agreements remain in full
force and effect, as expressly modified or altered by or in connection with
this First Amendment Agreement.
SECTION 6. CERTAIN LICENSES.
Without limiting anything in the Financing Agreements, on or before April
14, 2005:
(a) The Obligors doing business in, and/or having offices and/or facilities
and/or employees in, the State of Louisiana shall have obtained from the
appropriate administrative agency or other governmental authorities of the
United States of America and/or the State of Louisiana any and all consents,
approvals, licenses and/or other authorizations as may be necessary for the
operation of the businesses of the Obligors in the State of Louisiana, including
without limitation, the operation of horse racing facilities with pari-mutuel
wagering, Off Track Betting facilities, applicable gaming operations (for
example, without limitation, video poker), and the sale of alcohol and tobacco;
and
(b) The Company shall deliver to the holders the legal opinion of counsel
for the Company and Guarantors addressed to the holders, in scope, form, and
substance satisfactory to the holders and their counsel, and addressing the
matters in EXHIBIT F to this Amendment, along with any other matters required by
the holders.
SECTION 7. BREACH OF THIS FIRST AMENDMENT AGREEMENT.
In addition to any other Event of Default under Section 11 of the Existing
Note Purchase Agreements, any failure of the Company or any Guarantor to observe
and perform all of the terms, conditions and provisions of this First Amendment
Agreement, which is not remedied within five days after written notice from any
holder, shall constitute an Event of Default.
SECTION 8. MISCELLANEOUS.
SECTION 8.1. Except as amended herein, all terms and provisions of the
Existing Note Purchase Agreements and the Notes and related agreements and
instruments are hereby ratified,
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Churchill Downs Incorporated First Amendment Agreement
confirmed and approved in all respects. The Company acknowledges and agrees that
the holders may exchange their current Notes for new Notes which make reference
to the 2004B Collateral Documents.
SECTION 8.2. Any and all notices, requests, certificates and other
instruments, including the Notes, may refer to any of the Financing Agreements
without making specific reference to this First Amendment Agreement, but
nevertheless all such references shall be deemed to include this First Amendment
Agreement unless the context shall otherwise require.
SECTION 8.3. This First Amendment Agreement and all covenants herein
contained shall be binding upon and inure to the benefit of the respective
successors and assigns of the parties hereunder. All covenants made by the
Company and the Guarantors herein shall survive the closing and the delivery of
this First Amendment Agreement.
SECTION 8.4. This First Amendment Agreement shall be governed by and
construed in accordance with New York law.
SECTION 8.5. The capitalized terms used in this First Amendment Agreement
shall have the respective meanings specified in the Note Purchase Agreements
unless otherwise herein defined, or the context hereof shall otherwise require.
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Churchill Downs Incorporated First Amendment Agreement
The execution hereof by the holders shall constitute a contract among the
Company and the Guarantors and the holders for the uses and purposes hereinabove
set forth. This First Amendment Agreement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together only one agreement.
CHURCHILL DOWNS INCORPORATED
By /s/ REBECCA C. REED
Rebecca C. Reed
Title: Secretary
GUARANTORS:
CHURCHILL DOWNS MANAGEMENT COMPANY
By /s/ REBECCA C. REED
Rebecca C. Reed
Title: Secretary
CHURCHILL DOWNS INVESTMENT COMPANY
By /s/ REBECCA C. REED
Rebecca C. Reed
Title: Secretary
RACING CORPORATION OF AMERICA
By /s/ REBECCA C. REED
Rebecca C. Reed
Title:Secretary
Churchill Downs Incorporated First Amendment Agreement
CALDER RACE COURSE, INc.
By /s/ REBECCA C. REED
Rebecca C. Reed
Title: Secretary
TROPICAL PARK, INC.
By /s/ REBECCA C. REED
Rebecca C. Reed
Title: Secretary
CHURCHILL DOWNS CALIFORNIA COMPANY
By /s/ REBECCA C. REED
Rebecca C. Reed
Title: Secretary
CHURCHILL DOWNS CALIFORNIA FALL
OPERATING COMPANY
By /s/ REBECCA C. REED
Rebecca C. Reed
Title: Secretary
ARLINGTON PARK RACECOURSE, LLC
By /s/ REBECCA C. REED
Rebecca C. Reed
Title: Secretary
ARLINGTON MANAGEMENT SERVICES, L.L.C.
By /s/ REBECCA C. REED
Rebecca C. Reed
Title: Secretary
Churchill Downs Incorporated First Amendment Agreement
ARLINGTON OTB CORP.
By /s/ MARY ANN GUENTHER
Mary Ann Guenter
Title: Secretary
QUAD CITY DOWNS, INC.
By /s/ MARY ANN GUENTHER
Mary Ann Guenter
Title: Secretary
CDIP, L.L.C.
By /s/ REBECCA C. REED
Rebecca C. Reed
Title: Secretary
CDIP HOLDINGS, L.L.C.
By /s/ REBECCA C. REED
Rebecca C. Reed
Title: Secretary
ELLIS PARK RACE COURSE, INC.
By /s/ REBECCA C. REED
Rebecca C. Reed
Title: Secretary
CHURCHILL DOWNS LOUISIANA HORSERACING
COMPANY, L.L.C.
By /s/ REBECCA C. REED
Rebecca C. Reed
Title: Secretary
CHURCHILL DOWNS LOUISIANA VIDEO POKER
COMPANY, L.L.C.
By /s/ REBECCA C. REED
Rebecca C. Reed
Title: Secretary
VIDEO SERVICES, INC.
By /s/ REBECCA C. REED
Rebecca C. Reed
Title: Secretary
Churchill Downs Incorporated First Amendment Agreement
This foregoing First Amendment Agreement is hereby accepted and agreed to
as of the date aforesaid. The execution by each holder listed below shall
constitute its respective several and not joint confirmation that it is the
owner and holder of the Notes set opposite its name on Schedule I hereto.
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY
By: CIGNA Investments, Inc. (authorized
agent)
By /s/DAVID M. CASS
Name: David M. Cass
Title: Managing Director
Churchill Downs Incorporated First Amendment Agreement
This foregoing First Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid. The execution by each holder listed below shall
constitute its respective several and not joint confirmation that it is the
owner and holder of the Notes set opposite its name on Schedule I hereto.
GENERAL ELECTRIC CAPITAL ASSURANCE
COMPANY
By /s/ JOHN R. ENDRES
Name: John R. Endres
Title: Investment Officer
19
Churchill Downs Incorporated First Amendment Agreement
This foregoing First Amendment Agreement is hereby accepted and agreed to
as of the date aforesaid. The execution by each holder listed below shall
constitute its respective several and not joint confirmation that it is the
owner and holder of the Notes set opposite its name on Schedule I hereto.
EMPLOYERS REINSURANCE CORPORATION
By: GE Asset Management Incorporated, its
Investment Advisor
By /s/ JOHN R. ENDRES
Name:John R. Endres
Title: Investment Officer
20
Churchill Downs Incorporated First Amendment Agreement
This foregoing First Amendment Agreement is hereby accepted and agreed to
as of the date aforesaid. The execution by each holder listed below shall
constitute its respective several and not joint confirmation that it is the
owner and holder of the Notes set opposite its name on Schedule I hereto.
METROPOLITAN LIFE INSURANCE COMPANY
By /s/ JUDITH A. GULOTTA
Name: Judith A. Gulotta
Title: Director
Churchill Downs Incorporated First Amendment Agreement
This foregoing First Amendment Agreement is hereby accepted and agreed to
as of the date aforesaid. The execution by each holder listed below shall
constitute its respective several and not joint confirmation that it is the
owner and holder of the Notes set opposite its name on Schedule I hereto.
PRINCIPAL LIFE INSURANCE COMPANY
By:Principal Global Investors, LLC, a
Delaware limited liability company, its
authorized signatory
By /s/ JON C. HEINY
Name: Jon C. Heiny
Title: Counsel
By /s/ ELIZABETH D. SWANSON
Name: Elizabeth D. Swanson
Title: Counsel
Churchill Downs Incorporated First Amendment Agreement
This foregoing First Amendment Agreement is hereby accepted and agreed to
as of the date aforesaid. The execution by each holder listed below shall
constitute its respective several and not joint confirmation that it is the
owner and holder of the Notes set opposite its name on Schedule I hereto.
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By: Babson Capital Management LLC as
Investment Adviser
By /s/ EMEKA ONUKWUGHA
Name: Emeka Onukwugha
Title:
Churchill Downs Incorporated First Amendment Agreement
This foregoing First Amendment Agreement is hereby accepted and agreed to
as of the date aforesaid. The execution by each holder listed below shall
constitute its respective several and not joint confirmation that it is the
owner and holder of the Notes set opposite its name on Schedule I hereto.
C.M. LIFE INSURANCE COMPANY
By: Babson Capital Management LLC as
Investment Sub-Adviser
By /s/ /EMEKA ONUKWUGHA
Name: Emeka Onukwugha
Title:
Churchill Downs Incorporated First Amendment Agreement
This foregoing First Amendment Agreement is hereby accepted and agreed to
as of the date aforesaid. The execution by each holder listed below shall
constitute its respective several and not joint confirmation that it is the
owner and holder of the Notes set opposite its name on Schedule I hereto.
MASSMUTUAL ASIA LIMITED
By: Babson Capital Management LLC as
Investment Adviser
By /s/ EMEKA ONUKWUGHA
Name: Emeka Onukwugha
Title:
Churchill Downs Incorporated First Amendment Agreement
This foregoing First Amendment Agreement is hereby accepted and agreed to
as of the date aforesaid. The execution by each holder listed below shall
constitute its respective several and not joint confirmation that it is the
owner and holder of the Notes set opposite its name on Schedule I hereto.
SUNAMERICA LIFE INSURANCE COMPANY
By:AIG Global Investment Corp., investment
adviser
By /s/ PETER DEFAZIO
Name: Peter DeFazio
Title: Vice President
Churchill Downs Incorporated First Amendment Agreement
This foregoing First Amendment Agreement is hereby accepted and agreed
to as of the date aforesaid. The execution by each holder listed below shall
constitute its respective several and not joint confirmation that it is the
owner and holder of the Notes set opposite its name on Schedule I hereto.
PRUDENTIAL RETIREMENT CEDED BUSINESS
TRUST
By:Prudential Investment Management, Inc.,
as investment manager
By:/s/ MATHEW DOUGLASS
Vice President
27
Exhibits and schedules to the First Amendment Agreement to the Note Purchase
Agreement have been intentionally omitted because they are not material. The
Registrant agrees to furnish such omitted exhibits and schedules supplementally
to the Commission upon request.